Analyzing the Costs and Returns of US Meat Goat Farms By Berdikul Qushim, Jeffrey M. Gillespie, and Kenneth McMillin Introduction Over the past 25 years, meat goat production has increased in the US. Several factors have played significant roles in this expansion such as the formation of the American Meat Goat Association in 1992 and the American Boer Goat Association in 1993; repealing of the Wool Act of 1954 in 1993, which caused Angora goat producers to switch to meat goat production (USDA/APHIS, 2004); and financial settlements of the US tobacco industry, which caused former tobacco farmers to search for alternative farm enterprises (Spencer, 2008). ABSTRACT This paper analyzes the costs and returns of meat goat farms for the US and Southeastern US region. We compare components of costs and returns of meat goat production based on operation size (small and large) and targeted marketing segment (slaughter, breeding/show, and mixed). Our costs and returns analyses show that input expenses decrease substantially with increasing scale of operation. Increasing the number of meat goats for small meat goat farms can lead to reduced input expenses per acre. Berdikul Qushim is Research Associate and Jeffrey M. Gillespie is Martin D. Woodin Endowed Professor in the Department of Agricultural Economics and Agribusiness; Kenneth McMillin is Professor in the School of Animal Sciences, all in the Louisiana State University Agricultural Center, Baton Rouge, Louisiana. This research is based upon work that was supported by the National Institute of Food and Agriculture, US Department of Agriculture, under award number 2010- 85211-20476 and Hatch project LAB94178 from NIFA. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the US Department of Agriculture. 2016 JOURNAL OF THE ASFMRA 41
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Analyzing the Costs and Returns of US MeatGoat Farms
By Berdikul Qushim, Jeffrey M. Gillespie, and
Kenneth McMillin
Introduction
Over the past 25 years, meat goat production has increased in the US.
Several factors have played significant roles in this expansion such as
the formation of the American Meat Goat Association in 1992 and
the American Boer Goat Association in 1993; repealing of the Wool
Act of 1954 in 1993, which caused Angora goat producers to switch to
meat goat production (USDA/APHIS, 2004); and financial settlements
of the US tobacco industry, which caused former tobacco farmers to
search for alternative farm enterprises (Spencer, 2008).
ABSTRACTThis paper analyzes the costs and returns
of meat goat farms for the US and
Southeastern US region. We compare
components of costs and returns of meat
goat production based on operation size
(small and large) and targeted marketing
segment (slaughter, breeding/show, and
mixed). Our costs and returns analyses
show that input expenses decrease
substantially with increasing scale of
operation. Increasing the number of meat
goats for small meat goat farms can lead
to reduced input expenses per acre.
Berdikul Qushim is Research Associate and Jeffrey
M. Gillespie is Martin D. Woodin Endowed Professor
in the Department of Agricultural Economics and
Agribusiness; Kenneth McMillin is Professor in the
School of Animal Sciences, all in the Louisiana State
University Agricultural Center, Baton Rouge, Louisiana.
This research is based upon work that was supported by the National Institute of
Food and Agriculture, US Department of Agriculture, under award number 2010-
85211-20476 and Hatch project LAB94178 from NIFA. Any opinions, findings,
conclusions, or recommendations expressed in this publication are those of
the author(s) and do not necessarily reflect the view of the US Department of
Agriculture.
2016 JOURNAL OF THE ASFMRA
41
2016 JOURNAL OF THE ASFMRA
42
Furthermore, diversification of US population
demographics with immigration from goat meat
consuming countries has led to increased demand for
goat meat (Solaiman, 2007). Over the period 1997 to
2012, the number of meat goats produced in the US
increased from 1.23 million to 2.05 million (USDA-
NASS, 2012 Census of Agriculture).
Meat goats are produced in all US states; however, most
meat goat production occurs in the Southeastern US,
with Texas dominating the production of meat goats
(38%) among all US states (USDA-NASS, 2012 Census
of Agriculture). Goat production can complement other
livestock production such as cattle, sheep, and others
on marginal grazing pasture land. Goats efficiently
convert low-quality forage including brush and other
plants that are less desirable forage for other livestock
into quality lean meat, requiring little or no other feed
sources such as corn and other processed feed (Singh-
Knights and Knights, 2005). Moreover, meat goats can
be produced with a small amount of grazing land and
limited resources.
US meat goat production economics has not been studied
extensively compared with other livestock industries such
as beef cattle or swine (Qushim, Gillespie, and McMillin,
2015b). Therefore, comparatively little information
exists regarding analysis of US meat goat production
costs and returns based on different operation sizes and
segments such as slaughter, breeder, and show. Much of
the meat goat economics research in the US has focused
on goat meat marketing and consumer preferences
for goat meat (Worley et al., 2004; Knight et al., 2006;
Ibrahim, 2011). Several meat goat budget worksheets
have been developed by agricultural extension services
in the US. Sahs and Doye (2006) developed a meat goat
enterprise budget for Oklahoma assuming a 50-doe unit.
Their costs and returns are presented as those that could
be expected for this operation size, but do not reflect
averages of costs and returns across a sample of meat
goat farms.
A few studies have focused on US meat goat farm
production efficiency (Qushim et al., 2015a; Qushim,
Gillespie, and McMillin, 2015b), finding increasing
returns to scale for US and Southeastern US meat
goat farms. They also found that meat goat farms
could be scale efficient at 64 total goats or greater than
40 breeding does on their operations. There are also
production efficiency studies that have addressed the
industry in other countries (Zaibet et al., 2004; Ogunniyi,
2010; Alex, Cheemani, and Thomas, 2013). For the US
goat industry, meat goat production is now the dominant
enterprise compared to the production of goats for
milk and wool. The USDA-NASS (2012) Census of
Agriculture estimates show that about 77 and 78 percent
of all goats in the US were raised for meat in 2002
and 2012, respectively. Moreover, the number of meat
goat farms increased by 35 percent and operation size
of meat goat farms increased by 6 percent from 2002
to 2012, showing increased meat goat production. The
objective of this study is to analyze the costs and returns
of US meat goat production by operation size, region,
and segment, specifically slaughter, breeder, show, and
other mixed farms.
Data and Methods
For costs and returns analyses of US and Southeastern
US meat goat production, we use statistical procedures
to compare the means of costs and returns categories
by operation size and production segment. The
Satterthwaite approximation method is used to calculate
2016 JOURNAL OF THE ASFMRA
43
degrees of freedom, assuming that the samples have
unequal variances (Satterthwaite, 1946).
Data
We collected cost and returns data for 2011 from US
commercial meat goat producers during Winter, 2013,
using a nationwide mail survey. This cost and returns
survey was a follow-up to an earlier mail survey which
had collected information on production technology,
marketing, farmer attitudes, and farm and farmer
characteristics of US commercial meat goat farms in
Summer, 2012. By randomly selecting addresses of
these meat goat producers from an extensive Internet
search, the first survey was sent to 1,600 producers
who advertised their meat goat product online or were
members of meat goat production associations.
The survey was designed using Dillman’s (2007)
Tailored Design Method. After sending two surveys
and two postcard reminders, a total of 584 completed
responses from the earlier survey were received. Our
first survey response rate was 43 percent after adjusting
for producers who did not produce meat goats in 2011
and undeliverable surveys. The last question of the first
survey asked producers about their willingness to fill
out a second survey on costs and returns of meat goat
production. A total of 435 meat goat producers indicated
their willingness to fill out the second questionnaire.
Two mailings of the second questionnaire were sent to
those producers. A total of 124 completed responses
were received for the second questionnaire for an
effective return rate of 30 percent after adjusting for
incomplete and undeliverable surveys. The second survey
asked detailed questions about the farm’s revenues and
costs. The survey questions closely followed the format
of USDA’s Agricultural Resource Management Survey
(ARMS). The following discusses the specifics of the
returns and costs that were collected.
Returns
Gross returns to the meat goat enterprise as requested
in the survey included: (1) Meat Goat return, which is the
revenue from the sales of meat goats (in dollar value)